It’s no secret: the market is hot. But how hot is too hot? A suggests that the stock market’s near-record highs, while understandably welcomed by those with money in the market should also be a source of concern because the higher things rise, the more risk for a huge drop later. Such a drop could spell trouble for those who can least afford it: retirees and pre-retirees.

“It’s important to plan and be prepared for all the upward and downward spirals of investment,” says Jay Millard, principal of Millard Advisors, a financial planning firm based in Cold Spring, KY. “The market’s been on an upswing for several years, but what goes up must come down. While the growth is exciting, planning and protecting are definitely the names of the game right now.”

Many investors have become complacent, thinking the market will continue the way it has without making plans for when it turns. Getting an accurate assessment of how much risk they are currently taking with their money and if any of that risk can be managed is one way in which retirees and would-be-retirees can plan for a potential turn. Since terms like “conservative” or “risky” can mean different things to different people, understanding one’s actual level of need and risk tolerance is essential to making good investment decisions. Advice from a financial planner can help, but not all are created equal so it’s important to be aware of the differences.

Millard notes, for example, that advisors who are certified fiduciaries are legally and ethically bound to make decisions that are in the best interest of their clients and offer fee-based rather than commission-based services. This means they are much less likely to try and pressure clients into risky investments to increase their own bottom line. As well, advisors with some tax planning experience are also a smart way to go when choosing an advisor. Because so much of retirement planning overlaps with tax planning, working with someone who understands those ins and outs can help ensure that more money stays in the retiree’s pocket and not Uncle Sam’s.

Whether using an advisor or working alone, the advice remains the same: avoid unnecessary risk and keep money as sheltered as possible because hits in the pocket often run deeper than investors understand. “Most people are very competent and smart at their own professions, whatever they may be, but not so much when it comes to their money,” Millard says. “It’s sometimes hard to grasp, for example, that a 25% loss means you need an almost 33% gain to make up for it and break even. So that loss that seemed ‘small’ may actually hurt more than an investor realizes.”

Millard knows all too well the fear of not having enough retirement savings; his own foray into the financial world began when, after the death of his father, his mother faced an uncertain financial future. “No one should work their whole life and not have enough money to live on after they retire,” he asserts. Amassing capital and protecting it—“cashing it in” when necessary even if this means stagnated growth, which is still preferable to loss—is the only way to ensure a comfortable enough nest egg to quell those concerns.

In addition to all of this it is also crucial for those with special circumstances to understand how those circumstances can help or hinder their retirement planning. For example, small business owners are often left to manage their own retirement savings plans rather than having an employer who does so on their behalf. This may put them at more risk for inefficient or insufficient savings. As well, rental property ownership present both risks and opportunities when it comes to financial planning, so it’s important for those who own properties to fully understand how to make the most of what they’ve got. “These new tax law changes significantly affect small business owners and rental property owners,” Millard warns. “Property owners also have to think about things like disposition of their properties, which sometimes gets overlooked when planning.”

As retirees and those approaching retirement continue to ride the hot market wave, they’ll do best to look at the growth with a conservative eye. Planning and protecting now means more security and enjoyment later.

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